Stock Market Fears?: Hold on Until the Storm Passes

A large part of people's retirement savings today is in 401K plans or annuities that may be invested in the equity markets. If you are under 60 years of age, and have a financial advisor, most likely your advisor has recommended that part of your assets be invested in stocks. This is appropriate, as long as your investments match your risk tolerance and needs, both current and future. I am not a financial expert, but having worked at Merrill Lynch & Co. for many years, and building a relationship with my financial advisor over the years, I realize that stocks are an important part of one's portfolio over the long-term. Being a conservative investor, I was initally very wary of investing in stocks. However, as I review my retirement portfolio over time, I see where the gains and losses are and can see the importance of a stock portfolio.

Stocks will go up and down. If you have invested in stocks, and are now afraid of what's happening in the stock market, it's important not to panic. He are some general rules for stock market investing that will help you sleep at night and weather the storm.

1) Beware of "dabbling" in the stock market, and beware of one-off stock tips. If you have a sum of money to invest, you should engage a reputable financial advisor to guide you. The financial advisor should appropriately diversify your stock portfolio, and recommend other investments to keep your savings balanced.

2) Don't put everything you have in the stock market. Once again, a good financial advisor will recommend a diversified portfolio of bonds, cash and stock, and may recommend various financial instruments that combine stocks and bonds.

3) If you notice that your stock portfolio has been tumbling the last few weeks, contact your financial advisor now to ensure your are not overexposed in these markets. The advisor will give you confidence to hold on, or he may recommend some adjustments to improve your portfolio's performance.